Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Iraq's mostly peaceful Kurdish region tries to rebuild economy, de****e political uncertainty

Billboards in Kurdistan's capital boast that luxury malls and hotels are on the way, but banking and insurance systems barely function. Cranes loom over building sites, but few government inspectors check the quality of construction.

This is economic development, on the fly. A sign at the office of a trade association sums up the freewheeling business environment in the part of Iraq controlled by a Kurdish administration.

''Please leave your gun at reception,'' it says.

While much of Iraq is a patchwork of factions at war with U.S.-led troops or one another, the Kurdish zone north of Baghdad is mostly peaceful. The relative stability is fostering development. But the Kurdish economy is weak, dependent on imports and prone to political uncertainty and concerns about transparency.

Some investors are diving into this poor region full of untapped oil wealth, taking risks that would be unacceptable in a Western-style business environment. They include Kurdish businessmen based in Europe and the United States, Turks, Persian Gulf Arabs and a smaller number of Europeans and Americans.

Sigma International Construction, a Chantilly, Va.,-based company, is building more than 350 luxury homes on the outskirts of Irbil. Right now, the ''American Village'' development is little more than leveled earth and shells of half-completed houses, designed with walk-in closets, back doors of sliding glass and fully equipped kitchens.

Jim Covert, Sigma's director in Kurdistan, said 80 homes had been sold in advance, and several regional Cabinet ministers were clients. The most expensive residence, the ''Palace,'' sells for $580,000.

''People don't blink,'' said Covert, who employs Serb foremen and Bangladeshi laborers because they are more skilled than Kurdish workers. ''People have money here and they have nothing nice to spend it on.''

The same optimism is visible at construction sites across the city, though most of them seem a long way from the billboard images of gleaming office towers and five-star hotels bordered by lush lawns.

The regional investment board has licensed 51 projects with a total value of $5 billion since last year. But implementation is still in the early stages, with only about 20 percent of that money spent.

Two decades ago, most of Kurdistan's villages were systematically destroyed during Saddam Hussein's Anfal campaign against the Kurdish population. U.N. sanctions imposed on Saddam's regime also hurt the Kurds, even though they enjoyed a U.S.-backed safe haven after the 1991 Gulf War.

Although uneven, development since the fall of Saddam in 2003 has yielded real benefits in the territory of about 4 million.

The two main cities, Irbil and Sulaimaniyah, have new airports and are building roads, housing, malls and schools. De****e a recent outbreak of cholera in Kurdistan, many Irbil residents have access to clean water from a treatment facility built with help from the U.S. Army Corps of Engineers.

One new gasoline station in Irbil looks as good as anything in an American suburb or freeway stop. It takes credit cards, and has 16 pumps and a mini-market that sells potato chips, chocolate bars and other junk food from neighboring Turkey.

Hundreds of Turkish companies operate in Kurdistan, even though their government has threatened to stage a cross-border attack on a separatist rebel group of Turkish Kurds who have bases in remote parts of northern Iraq.

Another source of political uncertainty is Kurdistan's relationship with Baghdad, where disputes over drafts of oil and revenue-sharing laws have blocked progress toward a unified, central government. Kurdistan's leaders signed an exploration deal with Hunt Oil Co. of Texas after drafting their own oil law, and the national oil ministry quickly questioned its legality.

Nazaneen Muhammad Wusu, regional minister of municipalities, said international bank loans for Kurdistan have to be approved by the central government - a bottleneck on progress.

''Baghdad is not in a normal situation,'' she said. ''They are more busy with security issues, political difficulties. We are suffering indirectly from the situation there.''

Kurdistan is also on the national power grid, and suffers constant blackouts that force people to use private generators.

Kurdistan passed an investment law last year that allows foreign investors to get free land, as well as import materials and repatriate profits without paying tax. But the banking system is so basic that it is difficult to wire money out of the country, and insurance is virtually nonexistent; most car owners, for example, drive without it.

Foreign agencies are helping to build up Kurdistan's institutions, teaching basic skills such as how to use a computer. Still, a culture of transparency has yet to take hold, and business deals often rely on the power of personal connections.

''There may be some corruption here and there, we don't deny it,'' said Falah Mustafa Bakir, head of the foreign relations department of the regional government. But he said Kurdistan was committed to an open business environment that could eventually make it an economic ''gateway'' to the rest of Iraq.

Kurdistan, however, lacks a strong industrial and agricultural base and is heavily dependent on imports of products such as milk and grain, a legacy in part of the U.N. oil-for-food program during Saddam's rule that delivered foreign products to Iraq.

For all their problems, many Kurds exude an optimism that is all but impossible to find elsewhere in the country.

''I think things will get better,'' said Ali Abdullah, an Irbil bookshop owner whose best-sellers are romance novels and books of Islamic teachings. ''There's a lot of development in this city. It will have a positive effect on other businesses.''

Santa Barbara News-Press

Britain warns of Iraq 'contagion' in Mideast, Al-Qaeda threat

Britain's foreign minister warned Tuesday that "contagion" could spread from Iraq across the Middle East, urging the West to talk to all the country's neighbours to head off the threat.

Foreign Secretary David Miliband also underlined the need for an urgent solution to the Israel-Palestinian conflict to remove an "excuse" for Al-Qaeda to foment unrest in Iraq and elsewhere.

"Al Qaeda are using the suffering of the Palestinians as an excuse for violence," he said in a keynote address to the ruling Labour Party's annual conference.

"We need to remove the excuse. We need urgent progress to address Israeli security and Palestinian rights through the only solution, a two-state solution in the Middle East," he added.

Miliband set out principles of a "second wave" of Labour foreign policy under Prime Minister Gordon Brown, who succeeded Tony Blair in June.

Blair controversially led Britain to join forces with the United States in the 2003 invasion of Iraq. Brown is set to announce next month whether Britain plans to keep forces in the south of the country, and for how long.

Miliband warned that the Iraq conflict could have serious consequences for the wider region.

"We need to work with all the neighbours of Iraq to reconcile Sunnis and Shias, to prevent that conflict first fragmenting the country and then spreading like a contagion across the Middle East," he said.

Under Blair London notably promoted closer contacts with Syria, while Britain was one of three European countries, along with France and Germany, which spearheaded failed attempts to urge Iran to curb its nuclear ambitions.

Britain warns of Iraq 'contagion' in Mideast, Al-Qaeda threat - Yahoo! News UK

Kerbala Governorate purchases fuel tankers

Dr. Aqeel al-Khazaali, governor of Kerbala, has announced that contracts have been signed with international companies to purchase a number of fuel tankers, in addition to a rental agreement with a local tanker company.

Al-Khazaali added that these contracts came in order to guarantee the arrival of oil byproducts to the governorate which has been suffering from a continual supply shortage, with no tankers available for transportation.

He continued and pointed out that contracts were signed to purchase five other tankers within the 2007 budget to be delivered early 2008, reported Al--Mu’tamar.

Engineer Hussain Majeed Salih, director of the oil byproducts division in Kerbala, has denied local media agencies claiming the governorate has signed contracts with foreign companies to transport the fuel to the governorate. He said the oil byproducts division in Kerbala has actually signed contracts with a local company to transport the fuel.

Salih added saying, “We also signed a contract with the Iraqi Al-Mawj Al-Safi [clear wave] Company to rent 11 tankers, and these tankers have started transporting 40,000 litres per day to Kerbala. The division itself has six tankers which transport the oil byproducts to Kerbala from Al-Zubair Port.”

http://www.iraqdevelopmentprogram.or...ws/new1762.htm

Bush Urges Reconciliation in Talks with Iraq's Prime Minister

U.S. President George Bush has urged Iraq's political groups to pass legislation important for national reconciliation, such as an oil revenue-sharing law.

Mr. Bush made the appeal as he met in New York Tuesday with Iraqi Prime Minister Nouri al-Maliki. Both leaders are attending the U.N. General Assembly.

Mr. Bush also pledged his support for Iraq and its political leaders in trying to achieve national reconciliation and in fighting insurgents. He said if the United States leaves Iraq before the job is done, in his words, chaos would ensue, threatening the U.S. and the Middle East.

For his part, Mr. Maliki said Iraq is fully prepared to handle its responsibilities. He said the future of Iraq goes through the gates of national reconciliation.

VOA News - Bush Urges Reconciliation in Talks with Iraq's Prime Minister

Federalism in Iraq Could Be a Gusher for Oil

Sen. Joe Biden (D., Del.) has been hocking his federalist solution to Iraq on the campaign trail, in the media and among his Senate colleagues. The nonbinding resolution calls for an Iraq policy that supports stronger regional governments along sectarian lines, limiting the role of a central government to defense and division of oil revenue, and abiding the constitution already in place. The plan, which the Bush administration has rejected, may be voted on as early as today.

Several factors suggest federalism may be the natural course of events in Iraq regardless of a change in policy in Washington. The most intriguing is a new oil deal between the Kurdistan Regional Government, or KRG, and Texas-based Hunt Oil. The environment for investing appears to have improved in the Kurdish northern regions, but questions remain unanswered in the south -- where most Iraqi oil reserves are.

Oil-sharing legislation is the lynchpin that all sides have been awaiting to facilitate Iraqi political reconciliation. Hussain Ibrahim Saleh al-Shahristani, Iraq's oil minister, negotiated an accord and announced it in August with much fanfare. It was briefly hailed as "positive" news in the run-up to Gen. David Petraeus' recent report to Congress regarding the state of affairs in Iraq. The Iraqi National Assembly, however, seems unlikely to pass any legislation and rarely can manage even a quorum.

Recent events in Kurdistan further undermine the national accord. The KRG passed its own version of the oil bill earlier this year showing symbolic independence. The KRG predicated its agreement with Hunt Oil on the new law and has expressed its displeasure with the gridlock in Baghdad. Ashti Hawrami, KRG's minister of natural resources, said in a statement that the deal demonstrates "a supportive and transparent business environment which promotes investment by international oil companies in our region for the benefit of all."

One of a Kind

The Hunt deal is the first of its kind. According to both parties, it was negotiated in secret without the knowledge of Iraqi or the U.S. government. The deal involves drilling in only a portion of the Jabal Kand area of the Dihok region. Although it is a relatively small deal, analysts at Energy Intelligence -- a private publisher of energy reports such as the Energy Compass -- expect other independents to follow suit. Rumors surround Pioneer Oil & Gas (PXD - Cramer's Take - Stockpickr - Rating), which denies interest in a deal. Al-Shahristani, however, has stated unequivocally that the Hunt contract is null and void because it lacks the central government's approval.

The Bush administration has vocally supported the central government and Prime Minister Nuri al-Maliki. But the White House and State Department have made no public comment on the Hunt oil deal or its political implications. The State Department has an official policy to discourage such agreements. For example, Marathon Oil's (MRO - Cramer's Take - Stockpickr - Rating) deal to acquire Western Oil Sands (WTOIF - Cramer's Take - Stockpickr) remains contingent on the spinoff of Western's Kurdish division in order to conform with the State Department's policy.

Hunt Oil is the most intriguing piece in this puzzle. Hunt is an independent oil company based in Texas that has a history of taking risks, with its first foreign success coming in Yemen in 1984.

Its CEO, Ray L. Hunt, has ties to President Bush. According to the Center for Responsive Politics database, Hunt has made significant contributions to both the Republican National Committee and Bush's presidential runs in 2000 and 2004. He was named to the president's Foreign Advisory Board after 9/11.

The logical assumption is that Hunt Oil has not naively rushed into a bad deal. Greg Priddy, an analyst on transnational oil with the Eurasia Group, says the accord "reflects the reality on the ground in Kurdistan." Priddy noted: "There's a 70,000-strong militia force, a stable political environment and opportunities for the smaller players."

The most important point Priddy makes is that the industry no longer feels a "dilemma of offending the central government in Baghdad." This is a good sign for economic development in the north for the Kurds. The environment, however, in Baghdad and southern Iraq preclude the major players. Energy Intelligence analysts Paul Merolli and Ruba Husari say companies such as Chevron (CVX - Cramer's Take - Stockpickr - Rating), Conoco (COP - Cramer's Take - Stockpickr - Rating) and ExxonMobil (XOM - Cramer's Take - Stockpickr - Rating), nevertheless, look to big opportunities in the south. But security remains a big concern for corporations operating in Iraq, and lack of a federal oil law has held up contracts.

Sectarian Head Winds

Other factors also lead to a federalist reality. Sectarian violence forces 100,000 Iraqis from their homes each month. Baghdad has seen incredible population shifts in the last several years. Before the U.S. invasion, the capital was 65% Sunni and was an integrated city of both Sunnis and Shia. But after 4 1/2 years of violence, 75% of Baghdad's population are Shia. A recent analysis by the National Intelligence Estimate suggests the recent downtick in violence reflects the reality of this trend and segregated neighborhoods. Some reports suggest violence hasn't been reduced in Iraq.

The Bush administration has embraced a more regional solution to security during the recent "surge." Much has been made of our joining forces with Sunni militias to try and reduce the influence of Al-Qaeda in Iraq -- AQI. According to the administration, success against AQI has been made, but it is not clear if this regional model of security can be replicated in other areas.

Finally, Iraqis have a national identity. The unity has been tested by sectarian violence and a winner-take-all mentality. The Shias saw themselves as winners following the fall of Saddam Hussein, who was a Sunni. The problem clearly lies in getting all sides to come together and agree without one of the factions perceiving it has lost. Perhaps a looser federalist state will accomplish this goal.
Biden's prescience on Iraq shows he understands the reality on the ground. The Bush administration has high hopes for a regional solution to security, but the greater question is how long it will be before the administration wises up and works toward U.S. withdrawal from Iraq.

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Federalism in Iraq Could Be a Gusher for Oil - Markets - Market Features - COP - CVX

Kline says he sees 'amazing' progress in Iraq

Rep. John Kline, returning from his fifth trip to Iraq, said Tuesday he saw "amazing" progress in the security situation there, and a sense of normalcy returning among Iraqi people.

Kline, R-Minn., traveled to Iraq and Afghanistan over the weekend as part of a bipartisan House Armed Services Committee trip led by Rep. Neil Abercrombie, D-Hawaii.

Kline, who has been a supporter of President Bush's Iraq policy, said he was particularly impressed with the improved security in the Anbar province capital of Ramadi.

"The security situation there is just truly amazing. Just amazing," he said in a telephone interview. Kline said the Marine battalion commander there told the lawmakers that violence is way down.

"One of the great advantages of going is you can look and get a sense of what the atmosphere is," Kline said. "People are going about their business, the shops are open, they're walking around the street."

Kline said the lawmakers were greeted by children who laughed, teased and asked for money. Adults smiled and gave the thumbs up.

"Just a sense of normalcy—people getting on with their lives," he said.

The take by Kline, a conservative Republican, was similar to one by the state's liberal Democratic Rep. Keith Ellison, who visited Ramadi in July. In that trip, Ellison noted that people were walking the streets of the city, going to the market, and he had commented on the "general level of respect and calm that I thought was good."

But these two lawmakers have opposite approaches in mind for Iraq, with Ellison calling for the withdrawal of U.S. troops, and Kline supporting the Bush administration's policy.

Kline, a retired Marine, said he thought the surge of U.S. troops helped, but wasn't the deciding factor.

"I don't think it would be fair to say that the surge is responsible for what happened in Ramadi," he said. "It just sort of reinforced it. It showed the sheiks and the Iraqis there that the Americans were committed. It helped tip it in our direction."

Kline said the surge was more than adding 30,000 troops.

"What we've done is change how we're working there," he said. "Now they're interwoven with, sharing the same building with the Iraqi security forces. And I think that has really made the difference."

Kline said he wasn't able to get out and talk to children in Baghdad, but that the situation there was much improved from his previous visit, in June of last year.

"It's much more like it was the first time I went, in October 2003," he said.

In Baghdad, the group got a briefing from Maj. Gen. Joseph Fil, a senior U.S. commander. According to Kline, Fil told the lawmakers that while security has improved with Iraqis turning away from al-Qaida, there are still neighborhoods where fighting remains intense.

"It's still very dangerous and al-Qaida has sort of dug in in some of the neighborhoods," Kline said, "and the Iraqi Army and Iraqi police and U.S. and coalition forces are still engaged in some very heavy, tough fighting."

http://www.twincities.com/politics/c...nclick_check=1

Iraq, Turkey to sign an anti-terrorism pact targeting PKK

Minister Jawad Bolani arrived in Ankara on Tuesday to discuss with Turkish officials the details of a bilateral anti-terrorism agreement.

On arrival in Ankara, Bolani stressed his government's desire to enhance cooperation with Turkey saying they were ready to address all relevant files.

Bolani noted that the Iraqis would not accept any party using Iraqi land to attack Turkey.

During the two-day official visit, previously slated for August 23, the Iraqi Minister and the officials in the Turkish Interior Ministry, the Intelligence and military commanders would address the latest security developments on the Iraqi-Turkish borders.

Last month, Iraq's Prime Minister Nouri Al-Maliki visited Ankara where he signed a bilateral cooperation memorandum for combating terrorism.

Turkey is seeking to add a new item to the agreement allowing its forces to chase elements of the Kurdistan Labor Party (PKK) across the Iraqi borders.

By the same token, Ankara demands the Iraqi central government to hand over 150 PKK rebels, a list of which was already submitted to Baghdad.

The final agreement is expected to be signed within two weeks in case both parties agreed upon all items.

http://www.kuna.net.kw/NewsAgenciesP...57&Language=en

Kuwait, Iraqi FMs discuss political process, reconstruction in Iraq

Kuwait's deputy prime minister and foreign minister Sheikh Dr. Mohammad Sabah Al-Sabah held talks here Tuesday with Iraqi foreign minister Hoshyar Zebari on the upcoming meetings of Iraq's neighbors, the political process and reconstruction in Iraq.

Speaking to KUNA and Kuwait TV after the meeting, Sheikh Mohammad said Kuwait and Iraq have been always coordinating positions in the UN meetings because the Iraqi issue was of great interest to the international community, specially after adoption of UN resolution 1770 which expands UN mission in Iraq.

Kuwait will host next October a meeting of interior ministers of Iraq's neighboring countries, noted Sheikh Mohammad, who is visiting New York for the UN General Assembly meetings. He also cited the meeting of the foreign ministers of Iraq's neighbors in Istanbul, Turkey.

"The brothers in Iraq and us realize what is required from the neighboring countries, backing the political process, backing security and stability in Iraq, protecting and preventing violations of the Iraqi borders," said Sheikh Mohammad.

"We believe the efforts of this (Iraqi) government need support particularly concerning the national conciliation between all parties, we support the efforts of Iraqi Prime Minister Nouri Al-Maliki," added the Kuwaiti official.

Sheikh Mohammad said Iraq was in need of security and stability in order to pave the way for smooth reconstruction process thus regaining its regional position and strength within the international fold.

He said Zebari would be visiting Kuwait in the near future to continue consultations over a host of issues of mutual concern.

Zebari, meanwhile, said he informed Sheikh Mohammad about the security and political activities, as well as his diplomatic contacts in the UN and with US officials.

He said the Iraqi government has high hopes the security and political conditions were improving, "and they should be invested and built upon them. We need support of our brothers in the Arab countries.

"Kuwait was a leading country since day one and its position remains solid in backing the political process for the democratic change in Iraq," said Zebari.

http://www.kuna.net.kw/NewsAgenciesP...00&Language=en

Iraq takes another $4 off oil for Jordan

Iraq has knocked another $4 per barrel off the already discounted oil it has contracted to sell to Jordan, though security has delayed the tanker delivery.

Azzaman reports the Iraqi government has reduced the price from $18 per barrel below market price to $22 per barrel below.

The paper says the government is showing favor to the Jordanian government for standing by Baghdad. But Iraq could be assuaging Amman, which has been waiting a year for its needed oil.

Iraq has agreed to supply between 10 percent and 30 percent of Jordan's oil demand, estimated at at least 100,000 barrels per day. Iraq produces about 2 million bpd currently, but security in the north and west has constrained production, and nearly 100 percent of the estimated 1.6 million bpd in exports go to market from Basra.

Last week Iraq said tankers with oil bound for Jordan were en route, but there have been no reports that the shipments have reached the border. The road used goes through heavy insurgent areas.

Iraq is tasked with securing the tankers until the Jordanian border and supervision and ownership is transferred. Jordanian tanker trucks won't go into Iraq under the current security situation.

http://www.earthtimes.org/articles/show/113809.html

Senator John McCain to Give Major Foreign Policy Address on the War in Iraq & Stability in the Middle East

NEW YORK--(BUSINESS WIRE)--Hudson Institute, a non-partisan policy research organization dedicated to innovative research and analysis that promotes global security, prosperity, and freedom, will host Senator John McCain for a major policy address on the War in Iraq and stability in the Middle East on Thursday, September 27th at 9 a.m.

Senator John McCain to Give Major Foreign Policy Address on the War in Iraq & Stability in the Middle East: Financial News - Yahoo! Finance